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Mr. Brewer ♪
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I still disagree for I consider that a trustee bank should have a capital of $150,000.00 or thereabout and not a capital running into millions, because it would incite ridicule and I would never have permitted it, had I been able to prevent it. The reason why the Directors adopted this scheme by which nominal loans were issued and calls paid for the privileges of the loans, the reason was so that the Company could show a large capital on the Balance Shaet?.
I don't know what made them agree to it, I know that the scheme was intended to get money ready on demand without having an unnecessary amount of cash to find investment. As an inexperienced man I had not the confidence to find safe investments for so large a sum cf money.
As a result of this procedure of calle paid in aivence. You have credits on one side of the
books and debits on the other and these items balance?
That is correct.
The Denk itself was neither financially more mor less stable?.
I consider the Pank more stable because money
on demand made the ank more stable. The stabili- ty of a bank is often judged by the amount of money it has at call.
I suggest to you that something has happened which had no result.
What has happened is that by all these letters of application loans, the uncalled capital of the Bank has been converted into money recoverable by the Bank on demand. Previously to make a call it would only be after considerable formalities, which would take a period of time, but once we took this action of loaning money to the man on demand and receiving from him his paid up capital in full, the actual cash was not in hand but the ability of the Bank to demand cash was very valuable.asset. That is the point, entries have been made here in the books but no financial results occur? Except, as I pointed out, the Bank has been placed in a better position.
You are well acquainted with Company Law and you are basing the legality of the Report that if money is due from one side or the other (Statement read re a cash transaction) That is a cash transaction That is a cash transaction, but there are many
cash transactions, Take the case of r. iseung, at the time he gave hi Promissory Note, no money was due to the Bank. $500.00 was due from him on that date of the prom- issory note, a call had been just made. just made a second call of 5%.
Yes, but he had not got his shares?.
Yes he had, my Lord.
On what date did he become a shareholder?.
we had
On the 20th February he became a shareholder for 500 shares.
were shares allotted?.
Shares were allotted as to number on the 10th of June.
Prior to the 10th of June he was not liable to pay a call?.
No, he was not liable to pay prior to that date.
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